Explain the Intuition Behind the Link Between High Long Term

question 5

Essay

Explain the intuition behind the link between high long term yields and higher amount of risk.

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Definitions:

Diminishing Marginal Returns

The principle that as additional units of a factor of production are added to a fixed amount of other factors, the increase in output will eventually decrease.

Quantity of Capital

The total volume of physical assets, such as machinery and buildings, used in the production of goods and services.

Output Per Worker

The quantity of goods or services produced divided by the number of workers, indicating the productivity level of labor within an economy.

Technology Level

The current state of technological advancement or development within a society or sector.